Until now, four Japan-based CoQ10 suppliers have the capacity to supply multi-ton quantities of the ingredient but they have had their work cut out just keeping up with burgeoning domestic demand, meaning that relatively little has been left over for international markets.
Conservative estimates put worldwide sales of CoQ10 at around $350 million in 2004 - and they could have been considerably more if not stemmed by availability issues.
"Sourcing has been very difficult. Anyone outside Japan doesn't seem to be able to deal in metric tones, only kg values," Bert Israelsen, executive vice president of Frontier Scientific told NutraIngredients-USA.com.
But over the last 20 months, PharmaEssentia has been perfecting its organic synthesis production process and scaling it up to bulk capacity. Throughout development, it has been careful not to violate the patents of the Japanese producers, three of which produce CoQ10 through a fermentation process, with one also favoring organic synthesis, said Israelsen.
The exclusive deal in the US and Europe effectively makes Utah-based Frontier the fifth multi-ton supplier of CoQ10. The ingredient will be produced in Taiwan and imported to the US, where the company will on-sell it to ingredients companies supplying the supplements, cosmetics and personal care industries.
Accepting orders from this week, Frontier plans to ramp up to multi-ton capacity by the end of the year.
By spring 2006 it may have more competition from Kaneka, however, as the Japanese supplier is currently building an $80 million factory in Pasadena, Texas, and setting up a US subsidiary to tap into the enormous demand from the US.
Demand has increased partly thanks to a scientific study indicating that it may be of benefit to Parkinson's disease patients.
The antioxidant co-enzyme, which stimulates other enzymes into action, occurs naturally in the human body but levels decrease with age. Amongst a plethora of purported health benefits, it is believed to help prevent damage to collagen and elastin production, an action that has made it popular in anti-aging formulations.
In Japan, demand has mushroomed since CoQ10 was declassified as a pharmaceutical last year, paving the way for its use in nutritional supplements, foods and cosmetics products.
But supply has been unable to keep up even in its home market, as production is costly and time-consuming, and few companies have had the wherewithal to do it. What is more, a scarcity of raw material has also been reported.
The knock-on effect of this has been soaring prices. One source told NutraIngredients-USA.com in March that the spot price was in the region of $4000 per kilo, but Israelsen said he has since heard estimates as high as $5000.
He does not expect market prices to increase further, but until there is stability in the raw material supply they are unlikely to decrease significantly.
Israelsen could not give specifics on the tag Frontier's CoQ10 will carry, but said that it is "competitive" and linked to order quantity.
He said that PharmaEssentia's CoQ10 has been tested against other manufacturers', and that it meets United States Pharmacopoeia standards on quality and purity. It is anticipated that AOAC's validated analytical methods for CoQ10 will be published this year.
As to the business prospects of Frontier, a private company, Israelsen said that CoQ10 will be significant in terms of dollar sales, but its main focus will remain on R&D, particularly in support of pharma and biotech companies.